Navigating the difficult competitive landscape of direct-to-consumer markets is crucial to building a competitive edge that will lead to success.
Nothing in the business realm is made out of pure chance and without taking into consideration the possible opportunities or threats that could help or harm your brand, you might just be diving into a den of challenges with no backup plan in mind—a possibility we want to refrain from at all costs.
What is competitive analysis?
Competitive analysis in the context of DTC (Direct-to-Consumer) brands and consumer and market analytics refers to identifying and evaluating competitors in the market, their strengths, weaknesses, opportunities, and threats, and making use of this available information to help propel your business forward by creating informed business strategies and decisions.
Making use of comparative analysis in your day-to-day operations keeps you informed about who your active competitors are and knowing exactly what the competitive environment looks like, aids in finding the gaps in the market, and adjusts their offerings, marketing campaigns, and user experiences to meet customer preferences and needs.
Why do competitor research?
Brands aren't the only ones who constantly try to assess competition.
Students in your typical high school classroom often ask their friends if they scored higher than them on a quiz, or your neighbour might be asking you how you could afford your car despite your tight financial situation.
Assessing competition is not just a business thing. We have been doing competitive assessments even before we were aware of it.
But, why do we do it?
There are a couple of reasons for that. One of the reasons would be trying to retain relevance to competition. You don’t want to be different from a particular niche, and yet you also don’t want to be completely similar to them that you don’t get to express your unique flair. The same goes in business–you want to offer a particular service but don’t want to offer the same service as your competitors, but still retain your flavour in the mix, which goes to show why competitive analysis is important for every brand.
Benefits of competitive analysis
There are even more specific benefits to certain businesses if they apply consistent competitor research assessing their markets. Competitive research can be quite useful for both retail and service firms in helping identify areas where they are lagging or outperforming their competition.
Market understanding
Competitive analysis provides insights into market trends, customer preferences, and competitor strategies, helping businesses understand the dynamics of the market they operate in and make informed decisions. Understanding the key trends in the market and determining what your consumer preferences are will help you gauge the types of demands that the market needs and will help you determine the next best course of action the leverage your business.
Better audience targeting
Businesses now have the potential to identify gaps in the market thanks to effective market research which enables them to target specific customer segments and they tailor certain strategies to meet the needs and preferences of consumers. Through data-driven intelligence, companies can achieve the creation of customised experiences that are well understood by their audience and this leads to better brand loyalty and audience engagement.
Market potential forecasting
Competitive analysis allows for predicting possible markets, indicating industry trends, and hypothesising growth opportunities, which make it possible for businesses to remain ahead in the market and to adjust to changing conditions. Instantly recognising innovative technologies, and the shifts in buyer behaviour, brands can proactively position themselves to identify future market trends and maintain a competitive edge.
Retain brand relevance
Achieving brand relevance is particularly important in line with changing customer tastes, identifying new trends and monitoring competitors' strategies, market analysis takes on the most important role. Regularly tracking competitors' activities enables businesses to adapt their branding strategies as needed, ensuring their product remains relevant and meaningful to their target customers.
This whole idea is just part of the conscious understanding of why business-related competitive analysis works. The more you become mindful of how your competitors work in your industry, the more you realise how your brand becomes affected by their actions.
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This especially holds importance for DTC brands which constantly have to run their business daily. Every day is different for different DTC brands who tirelessly look for opportunities to scale their business. There are always different types of information circulating in the market that keep not just your competitors and you informed, but also respective stakeholders that care about the different aspects in business, whether it’d be consumer good prices, brand identity, or new campaigns, these aspects will be beneficial to keep track on for better decision making.
There are multiple approaches to evaluating competition. Depending on the areas of their business they choose to concentrate on, brands have access to a variety of analyses., and many businesses can perform different types of observations using particular tools.
Why brands conduct competitive analysis
Goals for both retail and service businesses may vary depending on the specific objectives and scope. However, both business types do have some similar objectives in certain areas as to why they do competitive research in the first place.
Clearly identifying your brand competitors
One key common goal is to be able to identify who these brands’ direct and indirect competitors are. If you’ve been in business for a while, chances are you already know most of the businesses that affect your business the most—these are your direct competitors. They are the ones that have the same products or services as your business, as well as the same target audiences, the same demographics, and so on.
The ones that don’t directly have the same products or services as your business but work in the same industry can be considered your indirect competitors. While indirect, it is still significant to count them as competitors especially if they provide products or services that your brand doesn't but also provide value to your target audience.
Make comparative analyses on products and services
Another goal would be to compare products or services with competitors. This way, brands can develop strategies that will help them differentiate themselves from competition through different strategies like developing new products or services that would make them more appealing to the consumer, or finding new ways to market their product offerings. This involves comparing competitors' products or services feature by feature, including pricing, quality, and even the level of customer support.
Despite these similarities, each business type does have its own unique goals that it needs to focus on to remain competitive.
For retail brands, conducting an analysis can help with identifying areas of improvement in your brands’ product offerings, pricing strategies, and marketing campaigns. Keeping your business alive consistently is the main goal when it comes to retail. Knowing exactly what your competitors are actively doing can also prompt you in making decisions that will help your brand to remain competitive and relevant in the market.
For service businesses, competitive research can help identify gaps in service offerings, pricing, and marketing strategies. This can help service providers know how their services are different from their competitors and capitalise on what they do best, developing strategies to differentiate themselves in the market and attract more clients—whether this might be for their marketing strategies or their service offerings.
What tools should be used to conduct a competitor analysis?
There are a variety of tools and methods you can use to conduct a competitive analysis. Here are some of perhaps the easiest ways to conduct a competitor analysis that you can do right now with or without out the use of external sources, or just simply by pure observation.
Manual research methods
To understand competitor analysis first, you might want to try out the most basic manual practises that businesses are already using.
Exploring competitor stores
As simple as exploring what your competitors are offering can be a vital step in starting your analysis. By visiting their websites, or even their physical stores, you can find out what type of business they are and what they stand for.
A few key things that you might want to consider when doing an active store observation would be:
- Competitor branding practises
- Competitor products and services
- Competitor pricing strategies
- Competitor marketing and social media practises
List down what you can observe from this and be intentional about it. Determine what it is that makes them different from your brand, and what aspects you can take from it.
Conducting a SWOT analysis
SWOT analysis is one way of conducting a comparative analysis against your competitors. How it works is that you list down your competitors’ internal and external strengths and weaknesses and piece them together in a matrix.
It is composed of 4 quadrants: Strengths, Weaknesses, Opportunities, and Threats. Strengths and Weaknesses show the internal aspects of the business, while Opportunities and Threats signify the external influences that could affect the business.
You need to fill up all these quadrants with your competitor’s characteristics. What their strengths and weaknesses are, as well as available opportunities and threats that might impact their business in the short and long run.
After creating the analysis, you should be able to understand how the business operates, how it does operations and marketing differently from your brand, and so on, and take that as a benchmark and as a decision-making aid to prioritise plans for your brand.
There are also other analysis tools available like the 3Cs and 4Ps analysis, and keyword-related analysis tools. SWOT is one of the easiest analytical tools that even beginners can start using and still get valid results.
Market research
Market research involves gathering data and insights about your competitors, customers, and industry. This can include surveys, focus groups, and interviews with industry experts. You can try this by gathering significant news reports, or research files already available to you. There is a tool that can help your determine your market size online to help you aid in your search.
Industry reports
Industry reports provide valuable insights into market trends, competitor strategies, and customer behaviour. These reports can be found through industry associations, research firms, and government agencies. It might take a while for you to get related information for your industry, but for starters, you can check out these free industry reports that will help you in your search.
Online Tools
There are available automated online tools that brands can use, readily available tha you can find on the internet. Here are some general tools you want to try to streamline your research process:
Market and consumer insights tools
In the age of AI, it is now easier to conduct market and competitor analysis considering the number of tools already available to the public. Market insights tools such as &facts allow brands to easily track existing leading brands in your market and map them out in a comprehensive competitor map.
Other information regarding your competitors is also laid out, such as product data, share of voice data, competitor matrix, and many others that will help you picture the competitive playing field for you.
Web analytics and tools
There are several tools that you can use that you can scour all over the internet. Some tools allow you to use their services for free, some paid.
Certain metrics are added to several tools to make comparative analysis easier, such as benchmarking, SEO keyword targeting analysis, web traffic metrics, and so on. Here are just a few tools that you can use right now to start:
- Google Trends - One of the tools that you can use for free available for everyone, that allows you to spy on your competitors’ competitiveness would be Google Trends. It is a valuable tool for competitive analysis as it allows businesses to gain insights into their competitors' performance, trends, and search behaviour.
Con: Only takes into account trends in higher search volumes.
- Google Alerts - Google Alerts is also one of the online tools that you can use to keep you notified of certain news in the industry. Just set up a Google alert for a specific keyword, and then Google will give you daily monitoring news about the keyword that you input, to gain valuable insights on the daily.
Con: You might need to manually setup the alerts and get individual notifications using different emails daily.
- Social media monitoring tools - One medium that brands use to stay connected and relevant to their audiences is the use of different social media channels.
There are several tools available for free that allow you to monitor several companies and even benchmark certain competitor metrics to serve as your basis for your next project. Monitoring your competitor’s social media practices is one way of doing active competitive analysis because you can continuously monitor what they’re about to do, or doing when it comes to strategies. Observe and think about how they make use of their brand voice to connect with their target audience, and what type of marketing strategies they are actively using to keep their brand relevant in the market.
How to do competitive analysis
Similar to how there are numerous factors to take into account when researching the position of your competitors, there are numerous approaches to take into account when doing a competitive study in your market. Here are a few things that you can do to start your competitive analysis.
Goal setting
There’s no wrong or right way to conduct a competitive assessment, however, before you start diving into doing your analysis, you need to set some goals and objectives and revisit the reason why you’re doing the assessment in the first place.
These goals can be knowing when to launch your new product, or determining the perfect time to announce your rebranding to your audience, or redefining your KPIs for the season.
If your competitors are prancing in your target market with a massive campaign that could overshadow your efforts, you wouldn't want to announce the launch of your next new product. The most effective timing for you will only come from preparation, which includes defining specific goals for what you're going to do.
Identifying competitors
The next step in conducting a competitive analysis would be to start identifying who your competitors are.
While it is simple to start jot down names of your possible competitors, segmenting them and labelling how your relationship with them in the market affects your business is one key thing that you can do to have an effective analysis.
List your competitors and identify whether they’re a direct competitor, indirect competitor, or a substitute competitor—businesses that offer products or services that can replace yours.
Sort these names according to your objectives. Check to see if your target goals, for the period you want to launch your campaigns, would directly affect any of your competitors.
List down these competitors on a spreadsheet or in a notebook where you can easily access them. Remember that you will need to constantly update their information from time to time so be sure to remember where you wrote your list.
Gathering competitor information
So, you have finally identified some of your competitors. Now you need to gather information about them. While going through their information, you should be able to answer the question: What is it that makes them competitive in the first place? Significant information that will help you identify this would include
Product information
What products or services do your competitors offer? How do they compare to yours in terms of features, quality, and pricing? How do consumers react to their product and what is their demand?
List down the products that the company is known for, and its key features and determine and analyse the features that your brand has and doesn’t have.
Social media presence
What is your competitors' social media strategy? How do they engage with their audience and what kind of content do they share? Are they sharing informative content? Solely promotional content? Be specific when determining these types.
Pricing strategies
What are your competitors' pricing strategies? How do they compare to yours? Determine the percentage of difference and how their customers react to their pricing position in the market. Are they in high demand? Are customers consistently buying from them? Are you choosing the right pricing strategy for your brand?
Marketing strategies
What marketing channels do your competitors use? How do they position their brand and what messaging do they use? How are they gaining leads? How are their advertising efforts?
You can gather this information through a variety of methods, including:
- Online research Use search engines, social media platforms, and company websites to gather information about your competitors.
- Primary research - Conduct surveys, interviews, or focus groups with customers, suppliers, or industry experts to gather insights about your competitors.
- Secondary research - Use industry reports, market research studies, or competitor profiles to gather information about your competitors.
Analysing competitor information
Once you have gathered information about your competitors, you need to analyse it to understand how your business fares against them. This can involve:
- Comparing product features and quality - Note your different competitors' products or services compared to yours in terms of features, quality, and performance. Certain metrics that you can take note of would be determining how many times the product features were used if consumers are happy with the quality of your products, and if there's an overarching positive performance on the products.
- Analysing pricing strategies - How do your pricing strategies compare to your competitors? Are you competitive in the market?
- Evaluating marketing strategies - How do your marketing strategies compare to your competitors'? Are you effectively reaching your target audience?
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How to do competitive analysis using &facts
&facts is real-time insights tool into consumer behaviours, needs and motivation and a very effective tool for brands who want to start practising competitive analysis.
We believe that while competitive analysis mostly focuses on gathering as much information from your competitors to help elevate your brand’s standing in the market, it will always be the consumers’ voice in the market that will prevail at the end of the day as they hold the power to determine whether your products or services are worth their resources.
The &facts platform has a lot of features and metrics that allow you to conduct thorough comparisons with what’s what consumers are looking for: data on the top products in the market, consumer insights on what they want and what they do not want–these are just a few of the things that platform provides for its users.
Thanks to &facts' real-time market and consumer insights, brands can make decisions about their time-specific goals and act upon them with greater clarity when using the data shown on the platform, without taking much time to generate the data.
Common competitive analysis pitfalls to avoid
With all the wonderful things that competitor analysis can provide for your business, it must be the perfect solution for your brand’s problems. Well, not exactly.
Despite my constant vocalising in this post about the wondrous (and perhaps also stressful) world of competition research, it does have its pitfalls that brands might find themselves in if they’re not careful.
Always remain objective when conducting your research
Speaking negatively about your competitors won’t do any good for your research.
It can be tempting, but your band won’t gain anything from baseless data. Refrain from placing your subjective views and insights on your competitors when researching as it will harm your brand more than you think.
Refrain from being passive in making decisions based on your research
The goal of competitive analysis is to identify market trends and make more informed decisions that will strengthen your brand instead of reacting hastily to your competitors' moves, making sure that the market trends are in favour of your business strategies and decisions for it can help validate your ideas depending on the factors that help elevate these trends. By being passive towards your competitors’ operations, you are reducing your ability to make important unique business decisions on your own that would have made the competitive field more balanced, which would’ve helped gain a competitive advantage for your brand.
Compare this task to a game of chess where you must both have your winning strategy and try to anticipate what your opponents will do. Your winning approach stays the same, but you can win the game by making adjustments to your strategy based on what your opponent does.
How to monitor your competitors
You will need to continuously keep an eye on your competitors' movements and maintain your saved list of competitors for reference and future usage. To avoid getting lost in the shuffle, bear in mind the following points when doing this.
Stay up-to-date on news relating to your competitors
This can be done by employing benchmark tools to provide you with updates on their respective market movements. Putting up a Google Alerts notification for each of your rivals is a popular method for accomplishing this, allowing you to keep track of their daily activities if they make any changes.
Another would be to read news constantly about what’s happening in the market. Chances are you will find new updates on your competitors, find new technologies that would affect you and the market, and maybe new regulations that might affect the industry in general. Keeping track of these changes constantly will keep you having elevated decisions that will help your brand remain relevant in the market trends.
Create and update your competitor map
Create a competition map, plotting your competitors based on factors such as market share, product and service offerings, pricing strategies, target audience, and geographical presence can help with visual referencing your competitors that you usually update from time-to-time. This visual representation provides clarity on the competitive landscape and helps identify areas of opportunity and threat.
&facts make use of the same concept, a market matrix, where top competitors for a particular product or industry are mapped to see where their influences are significantly important.
Bonus: How to create a competitor map
Knowing the competition, and studying their strengths, weaknesses, and market positions, can help a lot in ascertaining various aspects which would provide the business with more visual objects of comparison and the areas that need improvement.
An example of this is a competitor's map that can help a business identify where they have gaps and where to develop their product or service to better meet customer demands. It can reveal to the businesses their direct and indirect competitors, and help them to figure out their unique selling propositions, prices, and marketing efforts.
Creating a competitor map is a strategic exercise that helps businesses visualise their competitive landscape and identify key players in the market. Here’s a simple guide to create one:
Define parameters for your analysis
Begin by clearly defining the parameters of your market that you would like to use as your reference for your map. This may be geographical scope, industry sector, product/service category, or target customer demographics. For the &facts example above, the platform used Search Volume as its main parameter to determine which competitors are ranking well—a clear parameter to base competitiveness when it comes to consumer search demand.
Identify competitor categories
Based on your market parameters, identify different categories of competitors. These could include direct competitors offering similar products or services, indirect competitors addressing the same customer needs through different means, or potential future competitors entering the market. Make sure that your categories are related in one way or another, and easy to identify for you later on.
Plot competitors on the map using categories
Using the categories that you laid out, slowly add them to your map. Once competitors are plotted on the map, analyse the patterns, relationships, and insights that emerge. Look for clusters of competitors, gaps in the market, areas of opportunity, and potential threats.
Competitor landscapes are dynamic and can change rapidly. Make sure to update your competitor map regularly to reflect changes in the market, such as new entrants, mergers/acquisitions, product launches, or shifts in competitors' strategies.
At this point, you would have already understood the importance of the role that competitive analysis plays in your marketing efforts.
Are you going to start conducting competitive assessments starting today? Still not convinced? Try &facts today and discover how competitive analysis (and other related use cases) can help you elevate your marketing strategies by unveiling real-time, indispensable data about your brand and your competitors.
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